1st yr dstrbtion?

L1: 1st yr dstrbtion? I am thinking about retiring April 1, 2005. I am proposing to withdraw $3,000 a month from my pension/401k rollover. In the first year, under SEPP regulations, am I required to withdraw $36,000 ($3,000 x 12mos.) or am I allowed to withdraw $27,000 (April to Dec.)? I’ve heard both answers.2005-02-18 21:02, By: Mike, IP: [63.197.175.65]
L2: 1st yr dstrbtion? Assuming that $3,000 is the actual calculated SEPP distribution and not an arbitrary figure, you can do either in the first year.2005-02-19 06:21, By: Gfw, IP: [172.16.1.77]

L2: 1st yr dstrbtion? Mike,
What is your birth date? (It could possibly make a difference)
gus2005-02-21 16:41, By: gus, IP: [206.149.200.165]

L2: 1st yr dstrbtion? Absolutely correct. If not a ‘pension/401k rollover’ and the funds are currently in a 401(k) and he seperated from service after age 55, then the DoB could be a factor.2005-02-21 16:50, By: Gfw, IP: [172.16.1.75]

L2: 1st yr dstrbtion? I’ll be 51 this May.2005-02-21 19:20, By: Mike, IP: [63.197.175.65]

L2: 1st yr dstrbtion? Mike,
If 51, then see Gfw’s first reply.
However,please do the 72t calculations carefully to ensure the annual amount you desire meets the requirements.
gus2005-02-22 05:43, By: gus, IP: [206.149.200.35]

L2: 1st yr dstrbtion? Good morning Mike:
Based on the limited amount of information you have provided, especially the wording of your plan to withdraw $3,000 per month, I think Gus and I have the same uneasy feeling about your plan. Specifically I am concerned that you have picked the distribution amount you want rather than calculating the distribution amount allowed under 72(t).
When you make the calculations, the distribution percentage, or Applicable Federal Rate (AFR), is published by the government. You may use 120% of the AFR as your upper limit … you can’t pull a percentage out of the air or go on an expected rate of return from your investments. You can control the distribution amount by putting a specific amount into your IRA for the appropriate 120% AFR to get your $3,000 per month distribution. Use the calculators at the front of this web site to solve for your distribution.
The reason I am pointing this out is based on numerous posts to this boardof “help me after the fact” when the wrong distribution percentage was used for a SEPP. As you can guess, by that time it’s too late.
Hope this helps.
Jim2005-02-22 08:26, By: Jim, IP: [70.184.1.35]

L2: 1st yr dstrbtion? I have already done the calculations. I am able to draw approx. $42,000 per year from my total roll over of approx. $740,000.2005-02-24 01:14, By: Mike, IP: [63.197.175.65]

L2: 1st yr dstrbtion? Hi Mike:
With the additional information it sounds like you have a good handle on the process. Also sounds like you will be able to split your funds between two IRA’s: One for 72(t) using the max 120% factor, and the other IRA for emergencies. This is especially important since you will have almost 10 years to run before meeting the age 59 1/2 milestone. It’s nice to have a separate IRA to draw from if needed and only pay the 10% penalty on that amount rather than “bust” a SEPP and pay huge penalties.
Good luck.
Jim2005-02-24 11:00, By: Jim, IP: [70.184.1.35]

L2: 1st yr dstrbtion? Thanks, Jim. MY wife and I have done a lot of home work on this. However, I’m still getting conflicting answers to my original question. Any thoughts?2005-02-24 19:13, By: Mike, IP: [63.197.175.65]

L2: 1st yr dstrbtion? What conflicting answers are you getting? Please see my first response. 2005-02-24 19:20, By: Gfw, IP: [172.16.1.71]

L2: 1st yr dstrbtion? Thanks, GFW.
I was wondering if Jim concurred with your opinion.2005-02-25 01:07, By: Mike, IP: [63.197.175.65]

L2: 1st yr dstrbtion? Good afternoon Mike. Sorry about the delay in responding but I was out of the office last Thursday afternoon and all day Friday.
I concur with GFW’s first comment that you may either take the full $36,000 in the first year or go on $3,000 per month and only take $27,000.
Jim2005-02-28 14:45, By: Jim, IP: [70.184.1.35]